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ED Report April 19, 2006 Page 2 1. Maximize the Increment. If no changes are made to TIF policies, the City anticipates collecting approximately $14.6 million in non-obligated TIF increment over the course of the next ten years from the three original TIF districts, which expire in 2013 (District 1), 2015, (District 2) and 2014 (District 3.) These three original districts were set up as 25-year districts. The collected increment from these three districts represent “pooled” increment which can be spent on a variety of TIF eligible items anywhere in the “development district.” The development district, according to the TIF plans, represents the entirety of the City. Thus, the pooled increment (totaling $14.6 million) may be spent anywhere in the City so long as the expenditure is deemed TIF eligible. (Later in this report the Commission will find a list of potential expenditures.) There are presently three TIF obligations remaining in the City, one from each district: The Mermaid TIF note (pays off in 2013) from District 1, the Silver Lake Pointe project (pays off in 2011) from District 2, and the recently authorized SYSCO TIF note (pays off in 2008) from District 3. A fourth obligation from District 1 is inactive, that being the TIF note for Building N, which presently generates no property taxes as it is owned by Bethlehem Baptist Church (BBC) and is tax exempt. If no changes are made to our existing TIF districts, the amount of Market Value Tax capacity captured in Mounds View TIF districts is 16.29 percent. Factoring in the Medtronic development and its projected $96 million market value, the amount of the City’s tax capacity captured in TIF districts will rise to 22.32 percent. 2. Reduce the Increment. The City could act to reduce the amount of increment collected by a fixed amount or by a percentage. This could be accomplished in a number of ways, such as: a. Decertify a district early. District 3 would be the best candidate for this action. If done, the amount of tax capacity captured in TIF districts would decrease from 22.32 percent to 19.51 percent. b. Selectively decertify parcels within districts. The City did this in 2004 when it decertified approximately 81 parcels representing 10% of the captured tax value. c. Change the fiscal disparities election for the existing districts. This option would decrease the amount of tax capacity captured in TIF districts from 22.32 percent to 16.52 percent d. Turn back a set amount of non-obligated pooled increment to the appropriate taxing authorities. This option retains flexibility for future increments collected. On an annual basis, the City could elect to “turn back” any budgeted yet unexpended non-obligated increment to the proper taxing jurisdictions. There may be other mechanisms by which increment may be reduced, however the four noted above are the most obvious. Options A and B would be permanent solutions, while Option C and D could be reversed or scaled back as needed.